6. Why Corporate Governance?Why Corporate Governance?
Better access to external financeBetter access to external finance
Lower costs of capital – interest rates onLower costs of capital – interest rates on
loansloans
Improved company performance –Improved company performance –
sustainabilitysustainability
Higher firm valuation and shareHigher firm valuation and share
performanceperformance
Reduced risk of corporate crisis andReduced risk of corporate crisis and
scandalsscandals
7. Corporate Governance PartiesCorporate Governance Parties
Shareholders – those that own theShareholders – those that own the
companycompany
Directors – Guardians of the Company’sDirectors – Guardians of the Company’s
assets for the Shareholdersassets for the Shareholders
Managers who use the Company’s assetsManagers who use the Company’s assets
8. Four PillarsFour Pillars
of Corporate Governanceof Corporate Governance
AccountabilityAccountability
FairnessFairness
TransparencyTransparency
IndependenceIndependence
9. AccountabilityAccountability
Ensure that management isEnsure that management is
accountable to the Boardaccountable to the Board
Ensure that the Board is accountableEnsure that the Board is accountable
to shareholdersto shareholders
10. FairnessFairness
Protect Shareholders rightsProtect Shareholders rights
Treat all shareholders including minorities,Treat all shareholders including minorities,
equitablyequitably
Provide effective redress for violationsProvide effective redress for violations
11. TransparencyTransparency
Ensure timely, accurate disclosure on allEnsure timely, accurate disclosure on all
material matters, including the financialmaterial matters, including the financial
situation, performance, ownership andsituation, performance, ownership and
corporate governancecorporate governance
12. IndependenceIndependence
Procedures and structures are in place soProcedures and structures are in place so
as to minimise, or avoid completelyas to minimise, or avoid completely
conflicts of interestconflicts of interest
Independent Directors and Advisers i.e.Independent Directors and Advisers i.e.
free from the influence of othersfree from the influence of others
13. Elements of Corporate GovernanceElements of Corporate Governance
Good Board practicesGood Board practices
Control EnvironmentControl Environment
Transparent disclosureTransparent disclosure
Well-defined shareholder rightsWell-defined shareholder rights
Board commitmentBoard commitment
14. Good Board PracticesGood Board Practices
Clearly defined roles and authoritiesClearly defined roles and authorities
Duties and responsibilities of DirectorsDuties and responsibilities of Directors
understoodunderstood
Board is well structuredBoard is well structured
Appropriate composition and mix of skillsAppropriate composition and mix of skills
15. Control EnvironmentControl Environment
Internal control proceduresInternal control procedures
Risk management framework presentRisk management framework present
Disaster recovery systems in placeDisaster recovery systems in place
Media management techniques in useMedia management techniques in use
16. Control EnvironmentControl Environment
Business continuity procedures in placeBusiness continuity procedures in place
Independent external auditor conductsIndependent external auditor conducts
auditsaudits
Independent audit committee establishedIndependent audit committee established
Internal Audit FunctionInternal Audit Function
17. Transparent DisclosureTransparent Disclosure
Financial Information disclosedFinancial Information disclosed
Non-Financial Information disclosedNon-Financial Information disclosed
Financials prepared according toFinancials prepared according to
International Financial ReportingInternational Financial Reporting
Standards (IFRS)Standards (IFRS)
18. Transparent DisclosureTransparent Disclosure
Companies Registry filings up to dateCompanies Registry filings up to date
High-Quality annual report publishedHigh-Quality annual report published
Web-based disclosureWeb-based disclosure
19. Well-Defined Shareholder RightsWell-Defined Shareholder Rights
Minority shareholder rights formalisedMinority shareholder rights formalised
Well-organised shareholder meetingsWell-organised shareholder meetings
conductedconducted
Clearly defined and explicit dividend policyClearly defined and explicit dividend policy
20. Board CommitmentBoard Commitment
The Board discusses corporate governanceThe Board discusses corporate governance
issues and has created a corporateissues and has created a corporate
governance committeegovernance committee
The company has a corporate governanceThe company has a corporate governance
championchampion
A corporate governance improvement planA corporate governance improvement plan
has been createdhas been created
21. Board CommitmentBoard Commitment
Policies and procedures have beenPolicies and procedures have been
formalised and distributed to relevant staffformalised and distributed to relevant staff
A code of ethics has been developedA code of ethics has been developed
The company is recognized as a corporateThe company is recognized as a corporate
governance leadergovernance leader
22. Other EntitiesOther Entities
Corporate Governance applies to all typesCorporate Governance applies to all types
of organisations not just companies in theof organisations not just companies in the
private sector but also in the not for profitprivate sector but also in the not for profit
and public sectorsand public sectors
Examples are NGOs, schools, hospitals,Examples are NGOs, schools, hospitals,
pension funds, state-owned enterprisespension funds, state-owned enterprises